8.42am: It's an important day for local government. Eric Pickles, the communities secretary is telling councils how much money they will be getting in 2011-12 and 2012-13. And he's also publishing the localism bill, which will give local authorities more freedom. Less money but more freedom seems to be what's on offer from the coalition. But there are other things on the agenda too. Here's a full list.

As usual, I'll be covering all the breaking political news, as well as looking at the papers and bringing you the best politics from the web.

Photograph: Martin Argles for the Guardian Martin Argles/Guardian

9.09am: Eric Pickles (pictured, left) has been giving interviews this morning, and PoliticsHome has been monitoring them. Here are the highlights.

•He said councils would be able to cope with the cuts "relatively easily". They would have to do "more for less", Pickles said.

Graphic

I think it's going to be a tough settlement, but I think it's one that local authorities will be able to manage relatively easily. A number of them will have been making preparations for this ...

I have been offered advice from the Local Government Association as to what council can manage, in terms of the reduction in their spending powers. And I'm well within those figures for the majority of councils.

•He said that councils should start merging departments to save money.

This is about providing more council services for less money, and I am looking towards local authorities to start merging their back office services, sharing chief executives, sharing legal departments, accountants, planning departments, some cases local education authorities, to save money and protect the front line ... They've simply got to wake up to the fact that it's no longer viable to have their own chief executives, to have their own legal departments, their own education departments, their own planning departments.

•He said the localism bill would give councils more freedom.

At the moment, local authorities have to find a particular law to allow them to do things. We're going to change that round so that they can do anything they wish providing it's not forbidden by another statute.

•He said a review of local government finance would lead to the business rate being "repatriated", meaning councils will keep the revenue instead of having to pass it on to central government.

I think the existing system that we have, effectively works against local authorities doing that. The more enterprise they bring, the more houses they build, the more they lose. In January we're going to start a review of local government finance, ending in July in which we're going to see a repatriation of the business rates. There are clearly going to be a number of authorities who won't require any funding from central government.

9.30am: Eric Pickles has just told BBC News that the cuts being announced today should not lead to a large number of council workers losing their jobs.

While I'm expecting a number of posts to go, I'm not necessarily expecting a lot of jobs to go. And, where they go, I expect them to go from middle management and from the top, rather than from frontline services.

9.32am: Theresa May, the home secretary, will be making a Commons statement about the student demonstrations in London, I'm told.

I'm just off now to Church House, where Ed Miliband is giving a press conference at 10am. It's the first of what he's saying will be regular monthly press conferences as Labour leader.

9.55am: I'm at Church House now waiting for Ed Miliband. David Cameron used to do his press conferences in St Stephen's Club, where there was a portrait on the wall of Churchill. In this room there's a portrait of Frank Partridge, Bishop of Portsmouth in the 1930s, looking down at the podium where Miliband will be speaking.

10.04am: There's a pretty good turnout here, about 40 journalists. But we don't know if Ed Miliband is going to have an announcement for us. We'll find out soon.

10.11am: The Labour press notice says this will be Miliband's first "monthly" press conference. That may turn out to be a hostage to fortune. A colleague suggests that it would have been better to promise "regular" ones.

10.11am: Ed Milband is here.

He begins by taking about the demonstrations on Thursday. "The law should be bought to bear against those who are responsible for these act," he says.

•Miliband condemns the behaviour of the violent student protesters. But he also says he understands the "anger" of the students.

David Cameron is using the Lib Dems to justify "the economic agenda of the right", he says.

Today Miliband wants to make an offer to the Lib Dems. They should work with Labour to make a difference on social mobility, the economy and "the way we do our politics".

•Miliband urges Liberal Democrats to co-operate with Labour.

10.19am: Miliband is talking about social mobility. He says the abolition of the education maintenance allowance will "kick away the ladder" for children from poor backgrounds.

On the economy, he says the government is following a risky path. The argument in 2011 will be between Labour, that thinks the government should focus on growth, and the government, which is focusing on cuts.

Labour opposes the VAT increase and cuts in capital spending. There should also be more access to credit. A rethink on VAT would save 150,000 jobs, he says.

In the new year Labour will announce policy commissions on growth and other economic issues.

On new politics, Miliband accuses Cameron and Nick Clegg of practicing the "worst aspects of the old politics". They have both broken promises, he says.

Labour will not make these mistakes. "That is why I talk about under-promising and over-delivering," he says.

Miliband says many Liberal Democrats are "deeply frustrated and even ashamed" about the way the Lib Dems are behaving in government.

Since 1997, some benefits have gone up, he says. That may explain why there has been a sharp fall in the number of people saying benefits are too low.

Miliband says he supports welfare reform, but not simple cuts in welfare.

10.29am: Q: What should Labour councils do to oppose cuts?

Miliband says councils will have to take their own decisions. He says that in the coalition talks with the Lib Dems, he asked Chris Huhne and David Laws if they had considered the impact of faster spending cuts on jobs.

Q: Should councils cut services or raise council tax?

That's a matter for local councils, says Miliband.

10.35am: Q: A poll yesterday said only 27% of voters were satisfied with your performance? Why is that figure so low?

Miliband jokes that he would like to thank the 27%. He says Labour is ahead in the polls. He has embarked on a "very serious" policy review.

Cameron "betrays a sense of not really undertanding the impact [of cuts] on people's lives," he says.

10.35am: Q: During the election you said you wanted to destroy the Lib Dems. Shouldn't Lib Dems be suspicious of your offer?

Miliband said he actually wanted to make them "extinct". He was talking in the context of elections in Scotland. He still wants Labour to win every seat it can in elections. But he does not think Labour has the monopoly of wisdom. He made this point in his conference speech. He agrees with Tony Blair about this, he says. Blair made a similar point in a speech in 1995, he says.

10.35am: Q: How will Labour fight the Lib Dems in Oldham East and Saddleworth?

Miliband says Labour is fighting the Lib Dems in elections. But, at the same time, he wants to open Labour up to ideas from other parties.

10.36am: Q: How will you get back to the centre ground of British politics?

Miliband says his approach is a "centre ground strategy". What the government is doing on the deficit is "way outside the centre ground".

10.36am: Q: Why does David Cameron not understand the experience of ordinary people?

"Because he's a Tory," Miliband jokes,. More seriously, he says it is because of Cameron's world view. Cameron thinks government should "get out of the way". Cameron is "more ideological than perhaps people realise".

(This was an attempt to get Miliband to say "because Cameron went to Eton", I suspect.)

10.39am: Q: Would Miliband share a platform with Nick Clegg to campaign for AV? (Good question.)

Miliband says he would not rule out sharing a platform with people from other parties on AV. But he does not want the AV referendum to take place in May.

He also says that he does not want the campaign to become a referendum on Nick Clegg.

Miliband also suggests we should not expect to see him go on marches.

•Miliband seems to rule out going on protest marches.

10.40am: Q: Can you define the squeezed middle?

(Miliband got into trouble trying to answer this question on the Today programme recently.)

Miliband said he did not want to define it just in terms of income because he was trying to make a wider point. People are also squeezed in relation to time, he says.

10.41am: Q: What can Labour learn from the Lib Dems?

Miliband says the Lib Dems were right on certain aspects of civil liberties in the last parliament. And they were right on some green issues too, he says.

10.42am: Q: Is it right for English students at Scottish universities to pay fees, while Scottish students don't? And doesn't this issue cause resentment in England?

Miliband says this is "the price of devolution". It will produce "unevenness" in outcomes, he accepts.

10.45am: Q: Does Labour still support high-speed rail?

Miliband says he is a supporter of high-speed rail. But in a policy review it is important to consider all issues.

10.45am: Q: Is Labour still committed to taking Britain into the euro? And are you working to persuade your brother, David, to return to the frontbench.

Miliband says he would welcome his brother returning.

On the euro, Labour says the party decided not to go into the euro when it was in government. He has seen nothing to suggest the policy should change.

10.45am: Q: Are you definitely committed to a graduate tax?

Miliband says he favours a graduate tax. It is now for the policy commission to consider how this would work.

10.47am: Q: Would Nick Clegg have to stand down as Lib Dem leader for Miliband to work with the Lib Dems in a hung parliament?

Miliband says his position has not changed since he said during the Labour leadership election that he would find it difficult to work with a Lib Dem party led by Clegg. That turned out to be a "far-sighted remark", he says.

11.05am: It's over. One rule of Westminster press conferences is that their length tends to be in inverse proportion to their interest. This one lasted 50 minutes and, in story terms, it only produced a fairly modest offering: Miliband invited Liberal Democrats to contribute to Labour's policy review. Still, that's of some interest, and it will go some way to counter claims that Miliband is an irredeemable, Gordon Brown-style Labour tribalist. (I don't think he is at all, actually, but there are concerns, as one Labour figure put it recently, that he has been "dipped in the Brown paintpot".) At one point Miliband compared his gesture to the "comprehensive" offer that David Cameron made to the Lib Dems on the Friday after the election.

More generally, Miliband's performance was pretty good. He didn't dodge any questions, he was relaxed and polite and at times he was even quite funny. I particularly enjoyed the moment when he corrected the FT's George Parker after Parker said that Miliband had talked about destroying the Lib Dems during the Labour leadership contest. No, he talked about making them "extinct", Miliband said. Some newspapers have given the appearance that they are beginning to treat Miliband's leadership as a joke. But today the hacks treated Miliband with respect. That counts as a result, even if what he said will not get an enormous amount of coverage in tomorrow's papers.

Enjoyed 1st press conf on inviting disaffected Lib Dems to work w. Labour. Now on way to record a video in support of @SaveEMA.

11.53am: At his press conference Ed Miliband was asked about an interview that his brother David has given to the Journal. Ed welcomed the fact that his brother had suggested that he might return to the shadow cabinet. ("I have no plans to return to front line politics – at the moment that is," David said.) But Ed did not comment on the hint that David has still got his eye on an even bigger job. David also said this:

I've got to admit I wish the leadership campaign had gone differently, but who knows what will happen in the future?

The Journal has written this up as David Miliband refusing to rule out running again for the Labour leadership in the future.

12.19pm: You can read all today's Guardian politics stories here. And all the stories filed yesterday, including some in today's paper, are here.

As for the rest of the papers, here are two stories of interest.

• Yvette Cooper tells the Independent in an interview that the Labour government should have perhaps been willing to criticise America in public over human rights.

If you look at some of the things that George Bush said about water-boarding it's just shocking – really troubling. Guantanamo Bay was a huge problem and area of disagreement. Wherever we did not make that sufficiently clear I think that was the wrong thing to do. We should have said very clearly and strongly that that was the wrong approach.

• Lord Myners in the Financial Times (subscription) says that some of Britain's biggest banks should be broken up.

Writing in Monday's Financial Times, [Myners] argues that the future of the industry "lies in less monolithic institutions" and urges the Commission on Banking, appointed by the incoming coalition government in the summer, to focus on boosting competition. "The banking commission must give proper consideration to splitting one or both of Lloyds Banking Group and Royal Bank of Scotland."

12.26pm: At his press conference this morning, Ed Miliband made an offer to the Liberal Democrats.

To those who are reluctant to abandon ship but are concerned about the direction of their party, I invite them to work with us on issues of common interest ... I have asked Liam Byrne to work with Richard Grayson [a former Lib Dem policy director] to draw up areas where our policy review can be informed by submissions and ideas of Liberal Democrats who want to contribute. To Liberal Democrats who fear their deal with the Tories is shifting the gravity of British politics to the right, I invite them to work with us against the direction in which this government is taking Britain.

This offer may have been aimed at people like Tim Farron, the leftish party president who voted against the tuition fee increase last week. But Farron has just effectively told Miliband to get stuffed. He did not put it quite as directly as that, but that's a fair way of describing the tone of his response. Here's what he said:

Labour have just spent 13 years sucking up to Rupert Murdoch and George Bush - why would any sane progressive even give them a second glance?

As part of the coalition government, Liberal Democrats have started fixing Labour's economic mess, taking millions of people out of Income Tax and reforming British politics. Things Labour had 13 years to do but failed to deliver. The Liberal Democrats have also announced more cash for children from disadvantaged backgrounds, one of the biggest moves to improve social mobility in decades.

Continuing that work is something far more attractive to Liberal Democrats than helping Ed Miliband's increasingly desperate attempts to work out what he actually stands for.

However, if he is serious about co-operation then the first thing he should do is stop the Labour Party's attempts to block the referendum on electoral reform that he claims to support.

12.51pm: Here's a lunchtime summary.

• Eric Pickles has claimed that the localism bill being published today will lead to "a ground-breaking shift in power to councils and communities". In a statement, the communities secretary said: "It is the centrepiece of what this government is trying to do to fundamentally shake up the balance of power in this country." The bill will create directly-elected mayors in 12 cities (subject to confirmatory referendums), give voters the right to veto excessive council tax rises, give councils more freedom over what they can do, give communities the right to buy valued assets, abolish so-called "bin taxes", abolish the infrastructure planning commission, set up a national homeswap scheme for social tenants and allow councils to grant discretionary business rate discounts. Labour's Caroline Flint said: "The Tories' belief in localism is cynical and unfair. Their plans ring hollow when at the same time they are cutting local government by 27% on average over the next four years. It's offering councils devolution while holding a gun to their head." (See 12.05pm.)

• Pickles has said that councils should be able to cope "relatively easily" with deep spending cuts being announced later this afternoon. He also said that he did not expect "a lot" of jobs to go, and that councils should cut middle and senior management posts, not frontline jobs. Councils should economise by merging departments, he said. (See 9.09am and 9.30am.)

• Ed Miliband has invited disillusioned Liberal Democrats to contribute to Labour's policy review. "To Liberal Democrats who fear their deal with the Tories is shifting the gravity of British politics to the right, I invite them to work with us against the direction in which this government is taking Britain," he said at his first monthly press conference as Labour leader. Tim Farron, the Lib Dem president, has firmly rejected Miliband's offer. "Labour have just spent 13 years sucking up to Rupert Murdoch and George Bush," he said. "Why would any sane progressive even give them a second glance?" (See 12.26pm.)

• David Milliband has hinted that he might stand again for the Labour leadership at some point in the future. "I've got to admit I wish the leadership campaign had gone differently, but who knows what will happen in the future?" he said in an interview with the Journal. (See 11.53am.)

1.22pm: According to a tweet posted by George Pascoe-Watson, the Times journalist Tom Baldwin is going to join Ed Miliband's team as his new spin doctor. Miliband's office won't confirm this. They say that an announcement will be made shortly.

1.53pm: The Home Office has announced details of a four-year spending settlement for the police. By 2014-15 central government funding for the police will be down by 20% in real terms. Nick Herbert, the police minister, says that the cuts will be "challenging" but that "the government is clear that forces can make the necessary savings while protecting the frontline and prioritising the visibility and availability of policing".

The press notice also includes an intriguing line about security for the Olympics. It says that £600m will be made available for safety and security during the Olympics, but that the government "is confident it can deliver this for around £475m". That's rather like telling someone that £50 is available for their Christmas present, but that you're hoping to buy something for £30. It sounds rather like a cut.

2.29pm: The CBI has put out a statement welcoming the government's decision to withdraw something called the code of practice on workforce matters, which is also known as the "two-tier code". It ensures that new employees working alongside former public sector workers in outsourced services get public sector benefits. John Cridland, the CBI director-general designate, said this.

This is good news for taxpayers. The two-tier code has long been a major stumbling block for independent providers wanting to deliver public services. Its abolition will encourage new providers to enter the market, including smaller companies and social enterprises. That in turn will spur innovation and drive service improvements.

2.46pm: Eric Pickles will announce this afternoon that central government funding to councils is being cut by 8.9% next year, my colleague Polly Curtis reveals. That is not as bad as some councils feared.

3.01pm: The localism bill will create a new tax. Eric Pickles isn't calling it a tax, but that essentially is what it is. It's called the community infrastructure levy. The bill will allow councils in England and Wales to levy a charge on new developments in their area, to fund infrastructure that the community wants. Ministers can direct councils to spend some of the money in the neighbourhoods where the development is taking place.

• Councils will have a "general power of competence", allowing them to do anything not specifically banned. Fire authorities will get a similar power

• Councils will be allowed to return to the committee structure if they want.

• Councillors will be able to engage in normal political activities without being liable to legal challenge when they take decisions on the grounds they have a closed mind. Ministers want to clarify the law on this because the current rules have led to some councillors being discouraged from speaking on certain issues.

• The Standards Board for England will be abolished.

• Local Government Ombudsman rulings will become binding.

• Councils will have to publish a senior pay policy statement. If councils want to ignore it, there will have to be a vote at full council.

• Councils will lose the power to charge for bin collections.

• The duty on councils to promote greater involvement in local democracy will be abolished. Ministers think this is "an unnecessary burden" on councils.

• The government will be given the power to recover money from councils if they incur fines by breaking EU law.

• Councils will be given the power to instigate referendums. They will be non-binding.

• Voters will be given the power to veto excessive council tax increases. Any increase above a ceiling set by the communities secretary will have to be approved in a referendum.

• Community groups will have a "right to challenge", meaning they can apply to run local services.

• Communities will be given the right to buy certain community assets. Councils will keep a list of valued assets and, if they are put up for sale, communities will be given time to raise the money to buy them.

• The planning inspectorate will lose the right to rewrite local plans.

• Neighbourhoods will be given the right to permit development in their areas without the need for planning applications.

• Developers planning large schemes will have to consult the community before submitting a planning application.

• The infrastructure planning commission will be abolished. Instead there will be a new fast-track process for approving major infrastructure projects.• Councils will be able to decide who qualifies for their housing waiting list.

• Councils will be allowed to offer short-term council house tenancies.

• A national homeswap scheme for social housing tenants will be set up.• The law requiring home information packs will be abolished. (It has already been suspended.)

3.28pm: Theresa May will making a statement in the Commons shortly about the student demonstrations in London last week.

3.33pm: Theresa May says she is making a statement about the "appalling" violence that took place last Thursday.

She starts by thanking the police for their bravery. They enabled the Commons to carry on its businesss. And she also pay tribute to Sir Paul Stephenson, the Metropolitan police commissioner.

She is now describing what happened in London last week. The acts of violence was not committed by a small minority, she says. Some students behaved "disgracefully". But the protest was also infiltrated by thugs.

The blame for the violence lies with those that carried it out. It is not true to say that police tactics were to blame.

Policing in the UK is based on popular consent. That must continue.

Around 2,800 police officers were involved in the incident last week. Some 30 were injured. Six were hospitalised, but they have all been released.

Some 42 protesters were injured.

Already 35 people have been arrested.

• Number of arrests expected to rise "significantly".

3.38pm: Theresa May is still speaking. She confirms that a protester made contact with the Duchess of Cornwall. She says that an inquiry into this incident is being carried out.

3.39pm: Ed Balls, the shadow home secretary, is responding. He describes the attack on the royal car as "cowardly and despicable".

Balls says he does not want to jump to "hasty conclusions". The police have a difficult job to do, he says.

He says it is important to recognise the "bravery" of the police.

On royal security, Balls asks if May asked for an assessment of threats to the royal family before last week's protests. Will she shelve the review of royal security?

On the demonstrations, can May tell MPs how many people have been charged?

Why is May cutting the budget for Olympics security? (See 1.53pm.)

Will May confirm that the use of water cannons against demonstrators would be counter-productive?

3.44pm: Theresa May is responding to Ed Balls.

On royal protection, she says this is reviewed on a regular basis.

On the demonstrators, she says she will write to Balls with information about how many people have been charged.

On the Olympics, she says Balls was wrong to say the government was no longer providing £600m for Olympics security. She reads from the written ministerial statement saying that £600m is available. But the government thinks it can achieve the same ends for £475m. When Balls (from his seat) suggests that this proves his point, she cites that as evidence that he does not approve of trying to save money.

On water cannon, she says this has not been approved for use in England. At this stage she does not think it is necessary. If ministers were to approve its use, the police would have to decide whether or not its use was actually required. That's what "operational independence" is about, she says.

3.56pm: Theresa May says water cannon has not been a traditional part of British policing. But it has been used in Northern Ireland.

3.59pm: Ian Paisley Jnr says that part of the police operation was "a shambles". He asks Theresa May to confirm that the Met has asked to have two of the six water cannons available in Northern Ireland.

May says water cannon has not been approved for use in England. But the government will take advice from the police.

4.01pm: Theresa May says she has been assured by the police that protesters were able to leave Parliament Square on Thursday last week.

May says that she cannot comment on this case because it is being investigated by the independent police complaints commission.

4.08pm: Labour's David Lammy asks May to confirm that the IPPC are investigating complaints that protesters were not able to leave the "kettle". May says protesters were able to leave.

4.09pm: May says she was concerned to see one of the stewards for last week's demonstrations refusing to condemn the violence.

4.10pm: Labour's Dennis Skinner suggests that the "nasty, rightwing government" is to blame. May criticises him for not condemning the violence.

4.11pm: Labour's Jeremy Corbyn says he spoke to students who were held for seven hours against their will in a police "kettle" last week.

May says Corbyn should condemn the violence committed by a significant number of people on the demonstration.

Chris Pincher, a Conservative, asks when the police review of the demonstrations will be concluded.

May says these are operational matters for the police.

4.14pm: Labour's Jack Dromey mentions the apparent inconsistency between what May said yesterday about water cannon and what she said earlier. (See 3.44pm and 3.51pm.) Can she rule out the use of water cannon?

May says that no one wants to see water cannon used in England. The police operate on the basis of consent, she says.

4.18pm: Labour's Chris Bryant asks about water cannon. He says he experienced being on the receiving end of one in Chile in the 1980s. Will she rule out their use?

May says she doesn't think anyone wants to see them used in England and Wales.

That's it. We're on to Eric Pickles and local government finances now.

4.19pm: Eric Pickles says the local government settlement has involved "difficult" decisions.

Last year the government borrow £1 for every £4 it spent. The IMF has approved the government's decision to get the deficit down.

Pickles says he has sought to achieve a "fair and sustainable" settlement. It will be a "progressive" settlement, and fair between different areas of the country.

The poorest places have been "insulated" by the government's decision to give more weight to need in the settlement.

The government has responded to concerns about frontloading the settlement, he says. As far as possible, he has given the Local Government Association what it wants.

• No council will face a reduction of more than 8.9% in spending power in 20011-12 or 2012-13, Pickles says.

• The average council will face a cut of 4.4% in spending power in 2011-12.

Funding for adult social care will be protected, Pickles says.

The "vast majority" of councils have taken sensible plans to prepare for the cuts, Pickles says. The localism bill will deliver a new "democratic settlement" for councils. Councils will be given more freedom to act through the general power of competence. (See 3.01pm.)

4.28pm: Pickles is still speaking. He says in some areas councils have no incentive to invest, because any extra revenue from the business rates goes to central government. That is why Pickles has set up a review of local government finance.

4.29pm: Caroline Flint, the shadow communities secretary, is responding for Labour. She says the statement will be "deeply damaging". Pickles has inundated MPs with "empty rhetoric" about localism.

The cuts are the most "devastating" for a generation, Flint says. Yet Pickles is announcing them with "barely disguised" enthusiasm.

Why has Pickles frontloaded the cuts? Why has he not given councils the flexibility to handle redundancy payments?

Why has Pickles had so little to say about the impact of the cuts? Services will be affected, she says.

Flint says she accepts that the deficit has to be reduced. If Labour had won the election, local authority funding would also have been cut, she admits.

She asks Pickles to say if the committee stage of the localism bill will be taken on the floor of the House. (This is conventional for constitutional bill, and Pickles claimed it would introduce a new constitutional settlement.)

4.36pm: Pickles is responding to Flint. "So much for gratitude," he says. He claims his plans are more progressive than anything Labour produced.

4.41pm: Labour's David Blunkett congratulates Eric Pickles on being able to persuade the Liberal Democrats that a "scorched earth policy" is progressive. Blunkett also asks about the business rate in 2013-14. Pickles says that by 2013-14 he hopes that a new system of local government finance will be in place.

4.44pm: Labour's Joan Ruddock says Pickles must be using a different dictionary if he can describe this as "progressive". Lewisham faces draconian cuts, she says.

Pickles rejects this. He says Ruddock has a reputation for "shroud waving".

4.48pm: Labour's Louise Ellman asks about the impact of the withdrawal of the education maintenance allowance on Liverpool.

Pickles says Liverpool council saved £4.25m by getting rid of 48 senior staff. He says this is an example of how money is being wasted.

4.51pm: Labour's Bob Ainsworth asks Pickles why he was one of the first cabinet ministers to settle with the Treasury in the comprehensive spending review.

Pickles says that Ainsworth should not believe everything he reads in the papers. He settled with the Treasury three days before the deadline, Pickles says.

4.56pm: Labour's Hazel Blears says the abolition of the area-based grant will affect the poorest communities.

Pickles says the way to protect the poorest is to put money into the block grant.

4.58pm: Under the localism bill, there will be no more capping, Pickles says. The government will suggest a maximum council tax rise. Councils will then be free to go above this, but only if voters approve in a referendum.

Pickles says that he will be seeing Shakespeare soon and that he will ask him what he meant by his remarks.

5.13pm: The Liberal Democrat press office has sent out a press release saying that the Lib Dems protected the most vulnerable in the local government settlement. It includes this quote from Andrew Stunell, the Lib Dem local government minister.

The cuts are tough, there's no doubt about that, but the Liberal Democrats have worked hard to deliver a fair settlement for local government.

We've ensured that no council will face cuts of greater than 9% of their total spending power, and have guaranteed that authorities which previously received Working Neighbourhoods Fund will receive transitional funding to help wind up the programme.

5.15pm: The Institute for Public Policy Research has put out a statement saying the localism bill represents "a cosmetic commitment to localism" because it does not include plans to give councils more power over their revenue. This is from Ed Cox, director of IPPR North.

Localism is not achieved by simply 'handing down the axe' and leaving councils to make cuts dictated by central government policy. Real localism will only be achieved by reforming local taxation so that council tax is replaced by a fairer mix of income and properties taxes.

Currently, local councils get 80 per cent of their funds in the forms of grants, making them over-dependent on central government. In other countries, the percentage of funds raised locally is 50 per cent or higher - that is where we should be moving to if we really want local devolution in this country, not lipstick localism.

While the idea of 'people power' is appealing, and neighbourhood powers – especially planning – are a positive step, the unfortunate reality of this bill is that many local councils may end up being only too happy to offer voters the chance to fund and run services that they can no longer afford to support.

5.18pm: Back in the Commons, Charlie Elphicke, a Conservative, asks Pickles to confirm that £650m has been found to freeze council tax. Pickles says he is pleased to be freezing council tax.

5.20pm: In response to a question from Dennis Skinner, Pickles says Labour MPs are disappointed that the settlement has not delivered the "bloody stumps" that they wanted.

5.25pm: Labour's Tristram Hunt suggests that the government's commitment to localism will be "hot air" unless Pickles introduces a real end to rate capping.

5.29pm: Andy Sawford, chief executive of the Local Government Information Unit, a local government think tank, has issued this comment about the localism bill and the funding settlement.

It's a shame that for all the very welcome measures, such as the general power of competence for councils, ending ringfencing and removing inspection, councils will be left puzzled by the centralist approach of some parts of the localism bill. Why for example is there a double standard by national politicians about referendums on taxation and spending, and why is the government trying to force the elected mayor model on to cities. Why too has the government decided that local economic partnerships can only be created on the say so of Whitehall officials, rather than because local people want them?

In terms of the settlement, it is welcome that the secretary of state has moved to decrease the impact of frontloading the level of cuts, however the quick fix mechanism for damping down variations in council grants does appear to have created a real dog's dinner in which some councils will be left wondering whether they are receiving a fair allocation of funding. What is also clear is that even with the attempts to soften the impact, some councils are going to be facing much bigger cuts than others.

5.36pm: Here's an afternoon summary.

• Eric Pickles, the communities secretary, has said that councils in England and Wales will on average only have their "spending power" cut by 4.4% next year.He produced the figure as as published details of the local authority settlement for next year. "There has been a great deal of speculation and scaremongering about what the implications of the local government settlement might be. The reality is that despite the toughest economic circumstances in recent memory, the coalition government will ensure that next year the average reduction in councils' spending power will be 4.4 per cent," Pickles said. The government has changed the way money is allocated to councils, and Pickles and his Lib Dem colleagues have claimed that their formula is fairer. But reductions in "spending power" are not the same as reductions in central government funding, which is the measure normally used to assess the seriousness of cuts. Lady Eaton, the (Tory) chair of the Local Government Association, said this was toughest local government finance settlement in living memory. "A few councils have seen a reduction in the money they receive from the government of up to 17% in the first year," she said. "As a result councils face a total funding shortfall of £6.5 billion over the next year."

• A union has claimed that 73,000 council jobs will go as a result of the council cuts. The GMB said produced the figure, based on job losses that have already been announced.

• Ed Balls, the shadow home secretary, has claimed that police numbers will be cut as a result of the police spending settlement announced today. "People should be in no doubt that these deep cuts will mean thousands fewer police officers," Balls said. "Having totally failed to stand up for policing in the spending review negotiations, the home secretary has now ignored all the warnings from the police that imposing the biggest cuts in the first two years will hit the frontline hard." Balls also complained that the government hoped to spend £475m on Olympics security, not £600m as originally planned, but Theresa May said this should he did not understand the value of trying to save money. (See 1.53pm and 3.44pm.)

• Chris Huhne, the climate change secretary, has told MPs that there was 'a very significant step forward" at the Cancun climate change conference. "For the first time, there is an international commitment to 'deep cuts in global greenhouse emissions' to hold the increase in global average temperature below 2 degrees celsius," he said in an oral statement.